United Airlines will take special charges of more than $400 million for the second quarter after the value of its slot holdings at Newark Liberty International Airport plummeted to zero because of the Federal Aviation Administration’s April decision to open the airfield for more flights.
Prior to the announcement, United said it had considered its Newark slot holdings an “intangible asset” worth roughly $412 million. As of November 2015, when the U.S. Department of Justice sued United to keep it from acquiring 24 more slots from Delta Air Lines, United held 73 percent of the airport’s takeoff and landing rights, more than 10 times as many as any competitor.
In the now scuttled deal, United had planned to pay Delta $14 million for long-term use of the two dozen slots, as Delta planned to reduce its operation at Newark to grow elsewhere in the New York area. But the government had alleged United was seeking “to maintain and enhance its monopoly power” by trying to add more slots. Delta was also named as a defendant in government’s complaint.
The case became moot in April, after the FAA lifted capacity controls at Newark, saying the airport can handle more departures and arrivals. Starting in October, any airline can start flights at Newark provided it finds the terminal and gate space. There will be no need to acquire slots.
After accounting for income taxes, United said its special charge for Newark slots will be $264 million.
United said it had used its Newark slot holdings as collateral for two loan agreements, including one with Chase Bank. United said it had restructured the agreements to remove the Newark slot holdings as collateral. It said it did not put up replacement assets as collateral.